Europe is closing in with the pandemic: what consequences for the economy?

Published on : 06/01/2021 – 09:46

With the new wave of the pandemic and the lightning rise of Covid variants, Europe is reconfiguring itself. Is the recovery hoped for in 2021 compromised?

It is in the United Kingdom that the paralysis is the strongest, Scotland and England are totally frozen. This is also where the contagion has increased with the mutation of the virus.

Health takes precedence over the economy, or rather the two remain intrinsically linked: it is difficult to envisage recovery when hospitals are overwhelmed. But these incessant re-adjustments, the third as it stands, is precisely what weakens the recovery, of ” stop and go »Harmful to the availability and confidence of consumers and investors. Germany, which successfully contained the first wave, decided to extend these restrictions until the end of January. Italy also prolongs a harsh diet, not possible to see more than one friend per day. Denmark has just tightened prevention measures. Poland has opted for strict containment on Boxing Day. Greece has put in place a brief total containment until Monday. In France, several regions are subject to an early curfew, and restaurants throughout the territory are warned, they will undoubtedly remain closed beyond January 20, we will know more by tomorrow.

Can we already assess the impact of these adjustments on the economy?

In the United Kingdom, this third confinement scheduled to last six weeks will send the economy back into recession. We are talking about a potential drop in GDP of 10% over one month. The closure of schools, which represent a significant contribution to British GDP and which allow parents to go to work, is a further blow to an economy that is already very badly in shape. With the worst poor performance of the European class: its GDP fell by 11.3% in 2020 according to the latest figures available. Companies are suffering a double shock: that of Brexit plus that of closure. The Minister of Finance has already promised them substantial aid of 5 billion euros, already considered insufficient. The prospect of a return to normal is a little further away for the British, it will take at least two years to come out of the doldrums provided of course that the pandemic is finally under control in the coming weeks.

Germany expected to recover this year, is this scenario still plausible?

The 5% growth expected on the other side of the Rhine is no longer relevant, it will rather be around 3-4% and the rebound expected in the first quarter has already been postponed to the spring by German forecasters. However Germany keeps the same goal : it should be able to overcome the crisis this year. Provided that the confinement does not drag on into February and provided that the vaccination is carried out on time. A very sensitive subject in Germany. In France, where the pandemic now seems under control, it is also the slowness of vaccination that worries economists. The government has rectified the situation, it promises to step up the pace. 26 million French people need to be vaccinated to achieve collective immunity, a goal that can be reached in six months. Time is running out because each week of confinement or curfew costs 10% of GDP. Achieve immunity before the summer, it is on this bet that the promise of Bercy is based: a rebound of 6%.

►In short

In the United States, several Chinese online payment applications are threatened with ban

Threatened by Donald Trump. He continues his crusade against Chinese companies accused of espionage, the decree he signed yesterday against these applications will not come into force until after his departure, and to date the new administration has not made its position known. .

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